Medicare Made Simple
This informational page is designed to help with Medicare questions. It won’t answer all Medicare questions, but it will help understand Medicare options. For more information, schedule an online presentation or a personal appointment with Insurance4Dallas (I4D). Either way, I4D’s goal is to increase the understanding of Medicare. As a person transitions into Medicare, these are a few bits of information that needs understanding.
Here are the three main questions asked of persons who are signing up for Medicare.
- When am I eligible for Medicare?
- When can I enroll in Medicare?
- What are my Medicare choices and how do they work together?
When am I eligible for Medicare?
You are eligible to enroll in original Medicare, Medicare Parts A and B, if you are at least 65 years old or you’re under 65 and qualify on the basis of a disability or other special situation. In addition, you must be a US citizen or legal resident who has lived in the US for at least five consecutive years.
Before enrolling in Medicare, you must apply for Medicare through the Social Security Administration. If you are already collecting social security, then you will be automatically enrolled into both Parts A & B, therefore nothing need be done. Medicare Part B is voluntary, but enrollment is automatic when the recipient is enrolled in Part A coverage. People may choose not to participate in this program by filing a nonelection of Part B benefits on a special government form mailed to all individuals qualifying for Part A. Part B coverage requires payment of a monthly premium that is deducted from Social Security benefits. These premiums fund only about 25% of the cost of the program; the federal government pays the other 75% of the total program costs.
If you are not currently collecting social security, enrollment for Medicare through Social Security can proceed as early as three months prior to your 65th –birthday. Enrollment may continue up until three months after your birthday month; thereby giving you a 7- month initial enrollment period. If enrolled after this period, penalties could incur. In addition, enrollment in Medicare may be obtained due to a disability or special situation.
Drawing Social Security is not a requirement to activating Medicare when you become eligible. However, once you start drawing social security, which could be as late as age 70, Medicare Part B premiums will be withdrawn monthly. If you are not collecting social security, a quarterly payment of Part B premiums is due.
When can I enroll in Medicare?
The initial enrollment period for Medicare can be as far in advance as three months prior to your 65th birthday month or three months after your 65th-birthday month, thereby giving you a 7-month window to enroll. Also, a special enrollment period will apply if you qualify for coverage due to a disability or special situation. If you have an employer or plan-sponsored coverage when you first become eligible, you won’t need to enroll until you retire or otherwise lose that coverage. Prescription drug coverage known as Medicare Part D cannot be obtained unless you are enrolled in Medicare Part A and eligible for Medicare Part B. Part D benefits must be obtained through a Medicare approved plan to be creditable or you may be subject to a late-enrollment penalty.
Open enrollment for Medicare, also known as the annual enrollment period, is between October 15th and December 7th. This period is when Medicare Advantage or Part D prescription drug plans may be added, dropped or switched. The effective day of coverage will be January 1st of the following year.
Depending on certain circumstances, you may be able to enroll in a Medicare plan outside of the Initial Enrollment Period or Open Enrollment time frames. This means you may qualify for a special election period. Here are just four Special Election Periods, however there are more.
-Retire and loose your employer coverage
-Move out of the plans service area
-Receive assistance from the state
-Have been diagnosed with certain qualifying disabilities or chronic health conditions
There is also a disenrollment period for Medicare Advantage. The disenrollment period is between January 1st and February 14th. At this time, you may return to original Medicare A and B and select Medigap coverage and a Part D stand alone prescription drug plan if you choose.
What are my Medicare choices and how do they work?
After you enroll in Original Medicare Parts A and B, there are two ways to get additional coverage.
When you become eligible, enroll in Original Medicare, which is provided by the government.
Original Medicare Provided by the Government covers Medicare Parts A and B:
Part A expenses include in-patient semi-private room and board in a hospital; skilled nursing facility; three pints of blood and hospice care. These services are scheduled based on services rendered over time and have a $1288.00 deductible for calendar year 2016 and is subject to change each year. This deductible is based on occurrence, therefore could be paid more than once during a calendar year.
Now, in most circumstances, you will need additional coverage to help manage and coordinate the deductibles, co-pays and co-insurance of Medicare Parts A & B. As a result, you will have to enroll in either Medicare Parts C, also known as Medicare Advantage or a Medigap Supplement plan. All Medicare Advantage plans are offered through a private insurer contracted with Medicare. Many Medicare Advantage Plans include a Prescription Drug Plan known as Medicare Part C. However, if you enroll in a Medicare Advantage Plan that does not include prescription drugs, you will need to enroll in a stand-alone Medicare Part D prescription drug plan.
What is Medicare Advantage?
Medicare Advantage (MA), offered through a private insurer contracted with Medicare, combines and coordinates Medicare Parts A and B. Most Medicare Advantage plans will include prescription drug coverage known as Medicare Part D. Also, some Medicare Advantage plans may provide additional benefits not contracted through Medicare. These benefits promote wellness such as a senior fitness program, vision care and hearing aids. Medicare Advantage programs may participate in a PPO, HMO or PFFS network to manage costs. When choosing a MA, it is most important to know which doctors will accept the network plan offered you from the private insurer providing Medicare Advantage.
In many cases, Medicare Advantage will be low cost or no cost to the consumer, but will have copays, co-insurance and an annual out-of-pocket maximum expense. All Medicare Advantage plans are required to have “Out-of-Pocket Maximums”. The annual out of pocket maximum is the most you will pay in deductibles, co-pays and co-insurance in a given year for medical services covered by Medicare Parts A & B.
MA Co-pays may include, but are not limited to:
-Doctor’s office visits
-Inpatient hospital care
What is Supplemental Insurance known as Medigap?
Now that we know how Medicare Advantage works, let’s look at Medigap, an alternative supplemental insurance plan. Medigap Plans are offered through a private insurer regulated by Medicare. Medigap plans coordinate coverage with Original Medicare (Medicare Parts A & B). Medigap plans are labeled A – N, with each plan standardized according to its label. This would mean that all Medigap plans, offered through private insurers would have the same outline of coverage, but prices may vary depending on the provider. Medigap plans cover some or all the costs not covered by Original Medicare such as copays, deductibles and co-insurance. One of the most popular Medigap plans is, “Plan F”. Medigap Plan F, unlike Medicare Advantage, has no co-pays, deductibles or co-insurance but will always have a monthly premium. In addition, during your initial enrollment period, Medigap plans are guarantee issue. This means you cannot be rejected during the initial enrollment period for pre-existing medical conditions.
At the same time, Medigap plans are known to increase in price overtime to keep up with inflation. Medigap Plans do not come with prescription drug coverage. As a result, you will have to select a stand-alone prescription drug plan or Medicare Part D separately through a private insurer.
Medicare prescription drug plans known as Medicare Part D, when obtained with Medigap insurance, will require a monthly premium. Before selecting a Part D prescription drug plan, make sure your prescriptions are covered under the plan, your pharmacy of choice honors your drug card and the monthly premium is affordable.
Let’s summarize what we have learned about Medicare:
This is not all that is needed to know about Medicare, however it is a start to give a general understanding. For more information, pick up the phone and call Insurance4Dallas. That number is (972) 219-6004.